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Pitney Bowes Announces Second Quarter 2021 Financial Results

Pitney Bowes Inc. (NYSE: PBI), a global technology company that provides commerce solutions in the areas of ecommerce, shipping, mailing and financial services, today announced its financial results for the second quarter 2021.

“We delivered a solid second quarter and first half of the year,” said Marc B. Lautenbach, President and CEO, Pitney Bowes. “Once again, each business made a positive contribution to the quarter. Importantly, Global Ecommerce made significant progress and was EBITDA positive in the quarter putting this business on-track to our commitment of EBITDA positive for the full year. SendTech and Presort Services also grew revenue and profit over prior year. We are well-positioned to reach our goal of achieving improved profitable revenue growth.”

Second Quarter 2021

  • Revenue of $899 million, growth of 7 percent on a reported basis and 6 percent excluding the impact of currency
  • GAAP EPS and Adjusted EPS of $0.11
  • EPS reflects a $0.03 tax benefit associated with a UK tax legislation change
  • GAAP cash from operations of $79 million; free cash flow of $87 million
  • Global Ecommerce EBIT margin improved by over 200 basis points compared to prior year; EBITDA was positive.
  • Presort grew revenue and EBIT margin over prior year.
  • SendTech grew revenue; EBIT grew over prior year for the third consecutive quarter.

Earnings per share results are summarized in the table below:

 

Second Quarter*

 

2021

2020

GAAP EPS

$0.11

($0.02)

Discontinued operations, net of tax

0.01

0.02

GAAP EPS from continuing operations

$0.12

$0.00

Restructuring charges

0.02

0.02

Gain on sale of business

(0.02)

-

Gain on sale of assets

(0.01)

-

Gain on sale of equity investment

-

(0.05)

Tax on surrender of company owned life insurance policies

-

0.07

Adjusted EPS

$0.11

$0.04

* The sum of the earnings per share may not equal the totals due to rounding.

Business Segment Reporting

Global Ecommerce facilitates domestic retail ecommerce shipping solutions, including delivery, returns and fulfillment, and global cross-border ecommerce transactions.

Presort Services provides sortation services to qualify large volumes of First Class Mail, Marketing Mail, Marketing Mail Flats and Bound Printed Matter for postal workshare discounts.

Sending Technology Solutions offers physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications for small and medium businesses to help simplify and save on the sending, tracking and receiving of letters, parcels and flats.

Global Ecommerce

 

Second Quarter

($ millions)

2021

2020

% Change

Reported

% Change

Ex Currency

Revenue

$418

$398

5%

3%

EBITDA

$8

($2)

>100%

 

EBIT

($11)

($19)

43%

 

Revenue grew over prior year despite a tough comparison. EBIT and EBITDA benefited largely from Cross Border services and lower bad debt expense.

Presort Services

 

Second Quarter

($ millions)

2021

2020

% Change

Reported

% Change

Ex Currency

Revenue

$135

$118

14%

14%

EBITDA

$23

$20

12%

 

EBIT

$16

$13

28%

 

Revenue grew across all mail classes and benefited from an easier prior year comparison. EBIT and EBITDA improved from prior year largely due to the revenue growth and higher gross margin.

SendTech Solutions

 

Second Quarter

($ millions)

2021

2020

% Change

Reported

% Change

Ex Currency

Revenue

$346

$321

8%

6%

EBITDA

$115

$113

1%

 

EBIT

$107

$104

3%

 

Revenue benefited from growth in equipment sales, supplies, business services and support services, partly offset by a decline in financing. Revenue also benefited from an easier prior year comparison. EBIT and EBITDA improved from prior year largely due to the revenue growth.

Full Year 2021 Expectations

The Company’s full year 2021 expectations remain in-line with its previous communications. The Company continues to expect annual revenue to grow in the low-to-mid single digit range. The Company continues to expect adjusted EPS to grow over prior year driven largely by the improvement in Global Ecommerce, which is expected to be EBITDA positive for the full year. More specifically, adjusted EPS is expected to be in the range of $0.35 to $0.42. The Company also continues to expect lower free cash flow as compared to prior year primarily due to certain items that benefited 2020 and are not expected to continue at the same level in 2021.

Conference Call and Webcast

Management of Pitney Bowes will discuss the Company’s results in a broadcast over the Internet today at 8:00 a.m. EDT. Instructions for listening to the earnings results via the Web are available on the Investor Relations page of the Company’s web site at www.pitneybowes.com.

About Pitney Bowes

Pitney Bowes (NYSE:PBI) is a global technology company providing commerce solutions. Clients around the world, including 90 percent of the Fortune 500, rely on the accuracy and precision delivered by Pitney Bowes solutions, analytics, and APIs in the areas of ecommerce fulfillment, shipping and returns; cross-border ecommerce; office mailing and shipping; presort services; and financing. For 100 years, Pitney Bowes has been innovating and delivering technologies that remove the complexity of getting commerce transactions precisely right. For additional information, visit: www.pitneybowes.com

Use of Non-GAAP Measures

The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP); however, in its disclosures the Company uses certain non-GAAP measures, such as adjusted earnings before interest and taxes (EBIT), adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted earnings per share (EPS), revenue growth on a constant currency basis and free cash flow.

The Company reports measures such as adjusted EBIT, adjusted EBITDA and adjusted EPS to exclude the impact of items like discontinued operations, restructuring charges, gains, losses and costs related to acquisitions and dispositions, asset impairment charges, goodwill impairment charges and other unusual or one-time items. Such items are often inconsistent in amount and frequency and as such, the Company believes that these non-GAAP measures provide investors greater insight into the underlying operating trends of the business.

In addition, revenue growth is presented on a constant currency basis to exclude the impact of changes in foreign currency exchange rates since the prior period under comparison. Constant currency is calculated by converting the current period non-U.S. dollar denominated revenue using the prior year’s exchange rate for the comparable quarter. We believe that excluding the impacts of currency exchange rates provides investors a better understanding of the underlying revenue performance. A reconciliation of reported revenue to constant currency revenue can be found in the attached financial schedules.

Free cash flow adjusts GAAP cash from operations for cash flows of discontinued operations, capital expenditures, restructuring payments, changes in customer deposits held at the Pitney Bowes Bank, transaction costs and other special items. The Company reports free cash flow to provide investors insight into the amount of cash that management could have available for other discretionary uses. A reconciliation of GAAP cash from operations to free cash flow can be found in the attached financial schedules.

Segment EBIT is the primary measure of profitability and operational performance at the segment level and is determined by deducting from segment revenue the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, general corporate expenses not allocated to a particular business segment, restructuring charges and other unusual or one-time items, which are recognized on a consolidated basis. The Company also provides segment EBITDA, which further excludes depreciation and amortization expense for the segment, as an additional useful measure of segment profitability and operational performance. A reconciliation of segment EBIT and EBITDA to net income can be found in the attached financial schedules.

Complete reconciliations of non-GAAP measures to comparable GAAP measures can also be found at the Company's web site: www.pb.com/investorrelations

This document contains “forward-looking statements” about the Company’s expected or potential future business and financial performance. Forward-looking statements include, but are not limited to, statements about future revenue and earnings guidance and future events or conditions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from those projected. In particular, we continue to navigate the impacts of the Covid-19 pandemic (Covid-19), including its effects on the cost and availability of labor and transportation and global supply chains. Other factors which could cause future financial performance to differ materially from expectations, and which may also be exacerbated by Covid-19 or a negative change in the economy, include, without limitation: declining physical mail volumes; changes in postal regulations or the operations and financial health of posts in the U.S. or other major markets or changes to the broader postal or shipping markets; the loss of, or significant changes to, our contractual relationships with the United States Postal Service (USPS) or USPS’ performance under those contracts; our ability to continue to grow and manage volumes, gain additional economies of scale and improve profitability within our Global Ecommerce and Presort Services segments; changes in labor and transportation availability and costs; third-party suppliers' ability to provide products and services required by us and our clients; competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors; the loss of some of our larger clients in our Global Ecommerce and Presort Services segments; expenses and potential impacts resulting from a breach of security, including cyber-attacks or other comparable events; our success at managing customer credit risk; and other factors as more fully outlined in the Company's 2020 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission. Pitney Bowes assumes no obligation to update any forward-looking statements contained in this document as a result of new information, events or developments.

Note: Consolidated statements of income; revenue, EBIT and EBITDA by business segment; and reconciliations of GAAP to non-GAAP measures for the three months and six months ended June 30, 2021 and 2020, and consolidated balance sheets at June 30, 2021 and December 31, 2020 are attached.

Pitney Bowes Inc.
Consolidated Statements of Operations
(Unaudited; in thousands, except per share amounts)
 
Three months ended June 30, Six months ended June 30,

 

 

2021

 

2020

 

2021

 

2020

Revenue:
Business services

$

567,022

 

$

528,990

 

$

1,137,476

 

$

973,369

 

Support services

 

115,156

 

 

113,786

 

 

233,853

 

 

235,801

 

Financing

 

73,453

 

 

85,462

 

 

151,265

 

 

174,540

 

Equipment sales

 

86,267

 

 

57,837

 

 

173,070

 

 

134,110

 

Supplies

 

38,655

 

 

32,773

 

 

80,879

 

 

78,482

 

Rentals

 

18,650

 

 

18,644

 

 

37,857

 

 

37,458

 

Total revenue

 

899,203

 

 

837,492

 

 

1,814,400

 

 

1,633,760

 

 
Costs and expenses:
Cost of business services

 

482,814

 

 

454,311

 

 

982,348

 

 

828,976

 

Cost of support services

 

37,679

 

 

36,725

 

 

74,396

 

 

76,485

 

Financing interest expense

 

11,773

 

 

11,939

 

 

23,659

 

 

24,428

 

Cost of equipment sales

 

61,561

 

 

47,920

 

 

123,401

 

 

105,279

 

Cost of supplies

 

10,467

 

 

8,379

 

 

21,678

 

 

20,619

 

Cost of rentals

 

6,013

 

 

6,022

 

 

12,460

 

 

12,400

 

Selling, general and administrative

 

236,190

 

 

233,631

 

 

474,292

 

 

482,264

 

Research and development

 

11,059

 

 

7,467

 

 

22,375

 

 

19,583

 

Restructuring charges

 

4,844

 

 

4,922

 

 

7,733

 

 

8,739

 

Goodwill impairment

 

-

 

 

-

 

 

-

 

 

198,169

 

Interest expense, net

 

24,346

 

 

26,446

 

 

49,504

 

 

52,329

 

Other components of net pension and postretirement cost

 

312

 

 

386

 

 

662

 

 

235

 

Other (income) expense

 

(13,646

)

 

(17,375

)

 

37,748

 

 

16,112

 

Total costs and expenses

 

873,412

 

 

820,773

 

 

1,830,256

 

 

1,845,618

 

 
Income (loss) from continuing operations before taxes

 

25,791

 

 

16,719

 

 

(15,856

)

 

(211,858

)

Provision (benefit) for income taxes

 

4,915

 

 

17,016

 

 

(9,077

)

 

6,986

 

Income (loss) from continuing operations

 

20,876

 

 

(297

)

 

(6,779

)

 

(218,844

)

(Loss) income from discontinued operations, net of tax

 

(1,020

)

 

(3,032

)

 

(4,906

)

 

7,032

 

Net income (loss)

$

19,856

 

$

(3,329

)

$

(11,685

)

$

(211,812

)

 
Basic earnings (loss) per share (1):
Continuing operations

$

0.12

 

$

-

 

$

(0.04

)

$

(1.28

)

Discontinued operations

 

(0.01

)

 

(0.02

)

 

(0.03

)

 

0.04

 

Net income (loss)

$

0.11

 

$

(0.02

)

$

(0.07

)

$

(1.24

)

 
Diluted earnings (loss) per share (1):
Continuing operations

$

0.12

 

$

-

 

$

(0.04

)

$

(1.28

)

Discontinued operations

 

(0.01

)

 

(0.02

)

 

(0.03

)

 

0.04

 

Net income (loss)

$

0.11

 

$

(0.02

)

$

(0.07

)

$

(1.24

)

 
Weighted-average shares used in diluted earnings per share

 

178,979

 

 

171,478

 

 

173,367

 

 

171,167

 

 

(1

)

The sum of the earnings per share amounts may not equal the totals due to rounding.
Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited; in thousands)
 
Assets June 30,

2021
December 31,

2020
Current assets:
Cash and cash equivalents

$

799,470

 

$

921,450

 

Short-term investments

 

14,904

 

 

18,974

 

Accounts and other receivables, net

 

309,177

 

 

389,240

 

Short-term finance receivables, net

 

552,858

 

 

568,050

 

Inventories

 

67,538

 

 

65,845

 

Current income taxes

 

37,384

 

 

23,219

 

Other current assets and prepayments

 

117,425

 

 

120,145

 

Total current assets

 

1,898,756

 

 

2,106,923

 

Property, plant and equipment, net

 

429,785

 

 

391,280

 

Rental property and equipment, net

 

38,814

 

 

38,435

 

Long-term finance receivables, net

 

588,602

 

 

605,292

 

Goodwill

 

1,130,164

 

 

1,152,285

 

Intangible assets, net

 

144,692

 

 

159,839

 

Operating lease assets

 

205,584

 

 

201,916

 

Noncurrent income taxes

 

69,150

 

 

72,653

 

Other assets

 

507,748

 

 

491,514

 

Total assets

$

5,013,295

 

$

5,220,137

 

 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities

$

820,065

 

$

880,616

 

Customer deposits at Pitney Bowes Bank

 

632,833

 

 

617,200

 

Current operating lease liabilities

 

41,835

 

 

39,182

 

Current portion of long-term debt

 

97,015

 

 

216,032

 

Advance billings

 

119,645

 

 

114,550

 

Current income taxes

 

5,844

 

 

2,880

 

Total current liabilities

 

1,717,237

 

 

1,870,460

 

Long-term debt

 

2,330,698

 

 

2,348,361

 

Deferred taxes on income

 

286,338

 

 

279,451

 

Tax uncertainties and other income tax liabilities

 

37,155

 

 

38,163

 

Noncurrent operating lease liabilities

 

182,746

 

 

180,292

 

Other noncurrent liabilities

 

405,751

 

 

437,015

 

Total liabilities

 

4,959,925

 

 

5,153,742

 

 
Stockholders' equity:
Common stock

 

323,338

 

 

323,338

 

Additional paid-in-capital

 

5,903

 

 

68,502

 

Retained earnings

 

5,172,185

 

 

5,201,195

 

Accumulated other comprehensive loss

 

(831,303

)

 

(839,131

)

Treasury stock, at cost

 

(4,616,753

)

 

(4,687,509

)

Total stockholders' equity

 

53,370

 

 

66,395

 

Total liabilities and stockholders' equity

$

5,013,295

 

$

5,220,137

 

Pitney Bowes Inc.
Business Segment Revenue
(Unaudited; in thousands)
 
Three months ended June 30, Six months ended June 30,

 

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

 
Global Ecommerce

$

418,429

 

$

398,453

5

%

$

831,515

 

$

690,776

20

%

 
Presort Services

 

134,619

 

 

118,127

14

%

 

277,745

 

 

258,847

7

%

 
Sending Technology Solutions

 

346,155

 

 

320,912

8

%

 

705,140

 

 

684,137

3

%

 
Total revenue - GAAP

 

899,203

 

 

837,492

7

%

 

1,814,400

 

 

1,633,760

11

%

 
Currency impact on revenue

 

(13,521

)

 

-

 

(22,324

)

 

-

 
Revenue, at constant currency

$

885,682

 

$

837,492

6

%

$

1,792,076

 

$

1,633,760

10

%

Pitney Bowes Inc.
Business Segment EBIT & EBITDA
(Unaudited; in thousands)
 
Three months ended June 30,

 

2021

 

2020

 

% change

EBIT (1) D&A EBITDA EBIT (1) D&A EBITDA EBIT EBITDA
 
Global Ecommerce

$

(10,831

)

$

19,060

$

8,229

 

$

(18,894

)

$

17,297

$

(1,597

)

43

%

>100%
 
Presort Services

 

16,134

 

 

6,798

 

22,932

 

 

12,582

 

 

7,857

 

20,439

 

28

%

12

%

 
Sending Technology Solutions

 

107,121

 

 

7,537

 

114,658

 

 

104,268

 

 

8,776

 

113,044

 

3

%

1

%

 
Segment total

$

112,424

 

$

33,395

 

145,819

 

$

97,956

 

$

33,930

 

131,886

 

15

%

11

%

 
Reconciliation of Segment EBITDA to Net Income (Loss):
Segment depreciation and amortization

 

(33,395

)

 

(33,930

)

Unallocated corporate expenses

 

(56,316

)

 

(49,489

)

Restructuring charges

 

(4,844

)

 

(4,922

)

Gain on sale of business

 

10,201

 

 

-

 

Gain on sale of assets

 

1,434

 

 

-

 

Loss on debt refinancing

 

(989

)

 

-

 

Gain on sale of equity investment

 

-

 

 

11,908

 

Transaction costs

 

-

 

 

(349

)

Interest, net

 

(36,119

)

 

(38,385

)

Provision for income taxes

 

(4,915

)

 

(17,016

)

Income (loss) from continuing operations

 

20,876

 

 

(297

)

Loss from discontinued operations, net of tax

 

(1,020

)

 

(3,032

)

Net income (loss)

$

19,856

 

$

(3,329

)

 
 
 
Six months ended June 30,

 

2021

 

2020

 

% change

 

EBIT (1)

D&A

EBITDA

 

EBIT (1)

D&A

EBITDA

 

EBIT

EBITDA

 
Global Ecommerce

$

(37,207

)

$

37,236

$

29

 

$

(48,369

)

$

35,363

$

(13,006

)

23

%

>100%
 
Presort Services

 

35,185

 

 

14,297

 

49,482

 

 

28,277

 

 

15,631

 

43,908

 

24

%

13

%

 
Sending Technology Solutions

 

221,591

 

 

15,140

 

236,731

 

 

210,830

 

 

17,815

 

228,645

 

5

%

4

%

 
Segment Total

$

219,569

 

$

66,673

 

286,242

 

$

190,738

 

$

68,809

 

259,547

 

15

%

10

%

 
Reconciliation of Segment EBITDA to Net Loss:
Segment depreciation and amortization

 

(66,673

)

 

(68,809

)

Unallocated corporate expenses

 

(113,781

)

 

(93,211

)

Restructuring charges

 

(7,733

)

 

(8,739

)

Loss on debt refinancing

 

(52,383

)

 

(36,987

)

Gain on sale of business

 

10,201

 

 

-

 

Gain on sale of assets

 

1,434

 

 

-

 

Goodwill impairment

 

-

 

 

(198,169

)

Gain on sale of equity investment

 

-

 

 

11,908

 

Transaction costs

 

-

 

 

(641

)

Interest, net

 

(73,163

)

 

(76,757

)

Benefit (provision) for income taxes

 

9,077

 

 

(6,986

)

Loss from continuing operations

 

(6,779

)

 

(218,844

)

(Loss) income from discontinued operations, net of tax

 

(4,906

)

 

7,032

 

Net loss

$

(11,685

)

$

(211,812

)

 
(1) Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, and other items that are not allocated to a particular business segment.
Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited; in thousands, except per share amounts)
 
Three months ended June 30, Six months ended June 30,

 

 

2021

 

2020

 

2021

 

2020

 
Reconciliation of reported net income (loss) to adjusted EBIT and EBITDA
Net income (loss)

$

19,856

 

$

(3,329

)

$

(11,685

)

$

(211,812

)

Loss (income) from discontinued operations, net of tax

 

1,020

 

 

3,032

 

 

4,906

 

 

(7,032

)

Provision (benefit) for income taxes

 

4,915

 

 

17,016

 

 

(9,077

)

 

6,986

 

Income (loss) from continuing operations before taxes

 

25,791

 

 

16,719

 

 

(15,856

)

 

(211,858

)

Restructuring charges

 

4,844

 

 

4,922

 

 

7,733

 

 

8,739

 

Gain on sale of business

 

(10,201

)

 

-

 

 

(10,201

)

 

-

 

Gain on sale of assets

 

(1,434

)

 

-

 

 

(1,434

)

 

-

 

Loss on debt refinancing

 

989

 

 

-

 

 

52,383

 

 

36,987

 

Goodwill impairment

 

-

 

 

-

 

 

-

 

 

198,169

 

Gain on sale of equity investment

 

-

 

 

(11,908

)

 

-

 

 

(11,908

)

Transaction costs

 

-

 

 

349

 

 

-

 

 

641

 

Adjusted net income before tax

 

19,989

 

 

10,082

 

 

32,625

 

 

20,770

 

Interest, net

 

36,119

 

 

38,385

 

 

73,163

 

 

76,757

 

Adjusted EBIT

 

56,108

 

 

48,467

 

 

105,788

 

 

97,527

 

Depreciation and amortization

 

39,822

 

 

41,068

 

 

79,416

 

 

81,787

 

Adjusted EBITDA

$

95,930

 

$

89,535

 

$

185,204

 

$

179,314

 

 
Reconciliation of reported diluted earnings (loss) per share to adjusted diluted earnings per share (1)
Diluted earnings (loss) per share

$

0.11

 

$

(0.02

)

$

(0.07

)

$

(1.24

)

Loss (income) from discontinued operations, net of tax

 

0.01

 

 

0.02

 

 

0.03

 

 

(0.04

)

Restructuring charges

 

0.02

 

 

0.02

 

 

0.03

 

 

0.03

 

Gain on sale of business

 

(0.02

)

 

-

 

 

(0.02

)

 

-

 

Gain on sale of assets

 

(0.01

)

 

-

 

 

(0.01

)

 

-

 

Loss on debt refinancing

 

-

 

 

-

 

 

0.22

 

 

0.16

 

Goodwill impairment

 

-

 

 

-

 

 

-

 

 

1.14

 

Gain on sale of equity investment

 

-

 

 

(0.05

)

 

-

 

 

(0.05

)

Tax on surrender of company owned life insurance policies

 

-

 

 

0.07

 

 

-

 

 

0.07

 

Adjusted diluted earnings per share

$

0.11

 

$

0.04

 

$

0.19

 

$

0.09

 

 
Reconciliation of reported net cash from operating activities to free cash flow
Net cash from operating activities

$

78,805

 

$

153,777

 

$

144,729

 

$

86,422

 

Net cash used in operating activities - discontinued operations

 

-

 

 

618

 

 

-

 

 

38,423

 

Capital expenditures

 

(40,375

)

 

(34,176

)

 

(83,703

)

 

(59,954

)

Restructuring payments

 

4,870

 

 

5,318

 

 

8,825

 

 

11,365

 

Change in customer deposits at PB Bank

 

43,427

 

 

23,219

 

 

15,633

 

 

22,331

 

Transaction costs paid

 

-

 

 

377

 

 

-

 

 

2,117

 

Free cash flow

$

86,727

 

$

149,133

 

$

85,484

 

$

100,704

 

 
(1) The sum of the earnings per share amounts may not equal the totals due to rounding.

 

Contacts

Editorial -

Bill Hughes

Chief Communications Officer

203/351-6785

Financial -

Adam David

VP, Investor Relations

203/351-7175

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